Correlation Between Zacks Small-cap and Cardinal Small

Can any of the company-specific risk be diversified away by investing in both Zacks Small-cap and Cardinal Small at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Zacks Small-cap and Cardinal Small into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zacks Small Cap E and Cardinal Small Cap, you can compare the effects of market volatilities on Zacks Small-cap and Cardinal Small and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Zacks Small-cap with a short position of Cardinal Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zacks Small-cap and Cardinal Small.

Diversification Opportunities for Zacks Small-cap and Cardinal Small

0.0

Correlation Coefficient

Zacks Small-cap  Cardinal Small

Pay attention - limited upside

The 3 months correlation between Zacks and Cardinal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Zacks Small Cap E and Cardinal Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Small Cap and Zacks Small-cap is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Zacks Small Cap E are associated (or correlated) with Cardinal Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Small Cap has no effect on the direction of Zacks Small-cap i.e., Zacks Small-cap and Cardinal Small go up and down completely randomly.

Pair Corralation between Zacks Small-cap and Cardinal Small

Assuming the 90 days horizon Zacks Small-cap is expected to generate 6.79 times less return on investment than Cardinal Small. In addition to that, Zacks Small-cap is 1.31 times more volatile than Cardinal Small Cap. It trades about 0.0 of its total potential returns per unit of risk. Cardinal Small Cap is currently generating about 0.02 per unit of volatility. If you would invest  1,308  in Cardinal Small Cap on October 5, 2024 and sell it today you would earn a total of  136.00  from holding Cardinal Small Cap or generate 10.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Zacks Small Cap E  vs.  Cardinal Small Cap

Zacks Small Cap

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Zacks Small Cap E has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Cardinal Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cardinal Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Cardinal Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zacks Small-cap and Cardinal Small

The main advantage of trading using opposite Zacks Small-cap and Cardinal Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zacks Small-cap position performs unexpectedly, Cardinal Small can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cardinal Small will offset losses from the drop in Cardinal Small's long position.

The idea behind Zacks Small Cap E and Cardinal Small Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.